The Ultimate Stock Market Trends Quiz

Have you ever gotten a hot stock tip and been tempted to buy up a bunch of shares using all of your savings? Before you empty your bank account, take our quiz to learn about stock market trends and their effect on individual stocks. The inevitable fluctuations of the stock market may be a bit too nerve-wracking for your taste.

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Question 1 of 20

The best way to understand how the stock market works is by studying:

stock market trends

Though we wish there was a way to predict which stocks will go up and which will fall, there is no magic potion. The best way to predict the market is by studying past trends.

stock market prices

stock market indicators

Question 2 of 20

Which of the following factors can affect stock market prices?

inflation

energy prices

both of the above

Many diverse factors can affect the stock market. Economic factors such as inflation, energy prices, and fluctuating interest rates can all play a role, as can global factors such as wars and political unrest.

Question 3 of 20

Sudden rises or drops in stock prices are called:

strikes

spikes

Spikes in stock prices are hard to predict, but by studying the stock's "behavior" over a period of time it becomes easier to know when to buy or sell.

spokes

Question 4 of 20

What is the name of the central bank of the United States?

the Federal Banking System

the Federal Money System

the Federal Reserve System

Known affectionately as "the Fed," the Federal Reserve System is the de facto central bank of the United States and is responsible for various financial functions.

Question 5 of 20

Inflation is characterized by a rise in prices. It causes your dollars to be worth:

less

When there is inflation, the economy is doing well, but your dollar actually buys less. Inflation is caused by rising prices in response to a growing demand for consumer goods.

more

the same

Question 6 of 20

The Federal Reserve uses interest rates to control both business and personal spending. When they raise interest rates, spending tends to go:

down

When the Federal Reserve raises the interest rate for borrowing money, individuals and businesses spend and invest less. When they lower interest rates, they spend and invest more.

up

through the roof

Question 7 of 20

When a company reports _____profits, the public loses confidence in the company.

low

When a company reports high earnings, investors are confident that the company is doing well. When a company shows low earnings, confidence dwindles.

high

fantastic

Question 8 of 20

Which of the following tend to have a strong negative effect on the stock market?

high oil prices

Because gasoline is so central to modern life, high oil prices tend to affect the stock market strongly. People either find alternative modes of transportation or, more likely, cut down on other consumer products in order to be able to continue buying the gasoline they need.

high clothing prices

low car prices

Question 9 of 20

How do investors react during times of political or social upheaval such as war?

They spend their money.

They save their money.

During times of war, investors are understandably wary of spending their money. People tend to hang on to their savings during other types of upheaval as well and the stock market tends to fall in the wake of major economic fraud or crimes, terrorist activity or political scandal.

They invest their money in the stock market.

Question 10 of 20

The terms bull and bear market describe:

short-term trends in the farmer's market

long-term trends in the stock market

Bull and bear market are phrases that were coined to describe long-term trends in the stock market that are measured in terms of years. They don't refer to short-term changes in the market.

long-term trends in the supermarket

Question 11 of 20

A bull market is a _____ market.

falling

rising

A bull market is a rising market in a strong economy with low unemployment. Consumers are confidently spending money, which increases business profits and investors want a piece of the action, so they buy stocks, which then drives up stock prices.

plummeting

Question 12 of 20

A bear market is a _____market.

falling

A bear market is a market in decline, usually following a sharp drop in stock prices. Even if the market rallies for a while, a bear market tends to keep falling, bottoming out at about 40% lower than when it began.

rising

soaring

Question 13 of 20

The worst bear market in United States history is also known as:

the Great Bear Market

the Worst Bear Market

the Great Depression

The worst bear market in United States history began in 1929 and eventually bottomed out at about 90% lower than when it began, only fully recovering with the advent of World War II.

Question 14 of 20

How many times have bear markets appeared during the history of the United States stock market?

zero

once

many

Bear markets appeared during the Great Depression, the Vietnam War, the oil crisis of the 1970s and the dot-com crash of 2000.

Question 15 of 20

The best strategy for making money in a bull market is:

Buy low, sell high.

Even in a bull market, timing is key. The best way to make money is to recognize the market trends early on and buy stocks at low prices in the hope of selling them later at higher prices.

Buy high, sell low.

Buy at any price.

Question 16 of 20

A short sell is a stock trade that involves _____ stock you don't own.

buying

renting

borrowing

In the case of a stock trade called a short sell, you borrow stock, sell it, and when the price falls, you buy it back at a lower price, making a profit on the buy-back.

Question 17 of 20

Interest rates on _____ tend to rise during bear markets.

United States Treasury bonds

Interest on United States Treasury bonds tend to rise during bear markets, making them a low-risk investment in times of unstable markets.

Ugandan Treasury bonds

Mexican Treasury bonds

Question 18 of 20

Which type of stocks don't fluctuate much even in a bear market?

defensive stocks

If you still want to keep your money in the stock market in a bear market, try investing in defensive stocks such as utilities. Their value tends to remain steady even in a bear market.

offensive stocks

responsive stocks

Question 19 of 20

Stock markets _____ rise over the long term.

never

sometimes

always

Historically, the stock market has always made a comeback from bear markets and risen to greater heights than ever before.

Question 20 of 20

What may be the smartest way to invest in the stock market?

Always invest in a bull market.

Never invest in bear market.

Invest in strong businesses with growth potential.

The smartest way to invest in the stock market is probably to invest in individual, strong businesses with growth potential. Base your investment decisions on careful research and not on rumors and guesswork.